Optimism for property derivatives
Despite massive global real estate losses, the property derivatives market has been largely ignored, with trading activity focused almost exclusively in the UK. What are the prospects for growth in the asset class? By Peter Madigan
Property derivatives traders are optimistic. Despite notching up several years of growth prior to the financial crisis, the market struggled to reach critical mass, constrained by an almost uninterrupted increase in real estate prices. The collapse of the US subprime market, and subsequent nose-dive in property prices worldwide, has exposed the assumptions that drove the housing sector boom as flawed – and in turn, could spark greater interest in hedging risk, dealers hope.
Property derivatives
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